I am interested in a Mortgage for my investment properties

16 Replies

Hello,

I am in need of some direction. I am a tax lien investor and recently a judge entered foreclosing rights of redemption in my favor, so i'm getting ready to settle all the arrears so that i may gain access to the properties. Looking ahead to rehab work, and after doing my research for mortgage financing etc, amongst many requirements, but one in particular, i was told in order for me to get a mortgage for my investment properties, which will belong to my LLC, i would have to have the deeds in my possession to the properties seasoned for at least 6 months before being considered. Any advice to bypass this requirement of seasoning? It's been a long season with courts and fee's already, if i have to wait, then so be it, however if i don't have to, then we all know the answer to that. I would like to pay off the arrears and get some favorable rates from the banks and get to rehabbing the properties right away!

Lenders generally require that property owners possess marketable title before extending loans against real estate. Typically, borrowers must provide title insurance policies to protect the lenders' monetary interests. Lenders usually do not lend against real estate when the owner holds a tax deed because the tax deed does not create marketable title, or enable issuance of a title policy.

Quiet title actions are court proceedings that ask judges to enter orders stating a grantee holds superior title to a property. Quiet title actions allow parties who believe they have remaining claims to state their cases in court. If no one appears in court, an order in favor of the grantee is signed, and marketable title is created. If parties challenge tax sales, the grantees and opposing parties litigate to determine their respective rights.

This is for your state I looked it up.  So, if you have a marketable title or you get a quiet title then you can get a mortgage.

I hope this helps. 

Hi,

Thank you very much. The properties are actually in Maryland, and an order from the court has granted me and now forecloses the right of redemption, and orders that I be vested with an indefeasible fee simple title to the properties, after i pay the arrears.  Does this give me a marketable title as soon as the judge gets me the deeds or after receiving the indefeasible fee simple title, should i pursue getting  a quiet title then as you mentioned earlier i could go and get a mortgage, even before the 6 months seasoning?

As far as conventional financing, there isn't any way to get around the at least 6 month seasoning (some require 12 months) that I know of. If I was in your situation, since you say there are repairs to be made anyway, I would say it's not a bad option to get a hard/private money loan to pay off the arrears and do the repairs, then do a cash out refi in 6-12 months to pull your money back out.

Originally posted by @Rodney Banks :

Hi,

Thank you very much. The properties are actually in Maryland, and an order from the court has granted me and now forecloses the right of redemption, and orders that I be vested with an indefeasible fee simple title to the properties, after i pay the arrears.  Does this give me a marketable title as soon as the judge gets me the deeds or after receiving the indefeasible fee simple title, should i pursue getting  a quiet title then as you mentioned earlier i could go and get a mortgage, even before the 6 months seasoning?

Fee Simple Title

Fee simple title refers to how the title to the property is held. This form of vesting implies an absolute form of ownership. The owner of a property held as fee simple has the right to grant the property to anyone via a deed. If the owner keeps the property until his death, his heirs become the owners. When ownership is transferred, the fee simple title remains. Fee simple title can be impaired by liens and mortgages.

I am sorry I can not find out if you have to wait the six months.  It is not stated in anything I see. 

@Rodney Banks I do tax sales in MD. In MD you have legal title the moment you get a judgement. That is true whether you record you deed or not. Some title companies will insure a tax sale foreclosure in MD and some will not. The insurance underwriting companies sometimes have rules flat against it. 

The companies that will insure them still need to have the title company make sure the foreclosure was done correctly. There is no need for a quiet title action in MD. You do need to make sure you are dealing with a title company and underwriter that can insure tax sales. 

Regarding the "seasoning".  That is an issue that will vary from lender to lender. Do you have the money to record your deed and rehab the property?  If you do not, you are not looking for a "Refinance", you are looking for a construction loan. 

Virtually any time you are acquiring a property that is not ready to move in or rent, you need some type of construction financing.  Once the property is up and running, then many lenders will want it to be seasoned before refinancing.  If you want cash out ie: more than you paid originally, then seasoning becomes more of an issue. 

So in your situation, you would get a construction loan often people would use hard money, then refinance out in 6 months to a year. 

What jurisdiction is the property you foreclosed in?

Hmm..that's interesting. So you're saying because i have the judgments to the properties, even before i settle the arrears with the city/county, that i technically have title now, or will i be given the titles once i settle the arrears? The properties are in Washington County and Caroline County MD.  As for the seasoning of the title is concerned, are there any lenders that you've become acquainted with, that do not have this requirement?

I was told by a source off of another blog, i do not know this individual, but has said that ....

"All required from you is a security deposit to waive off the need of a collateral. The security deposit covers borrowers credit check and basic administrative costs before the loan transfer will be initiated".

Any thoughts on this maneuver?

A lot of what you're asking for would constitute legal advice.  Although an investor in your jurisdiction might have experience with similar actions, to get the best up-to-date information (and save others the risks of unlicensed practice of law) you're best off talking with an experienced real estate attorney barred in the appropriate jurisdiction.  Past experience suggests that even experienced investors sometimes dispense wrong information about the legal requirements for their own areas.  The questions you're asking should be answerable in a few minutes, for minimal cost.

I can speak for the lending side, not too much the title side, I'm in California. As a lender, you could do a cash out before the six months if you purchased the property all in cash, provide documentation that you did (bank statements, etc.), bought as a natural person or LLC (in which you own 100%), and get a preliminary title report showing no liens. This process is called a 'delayed purchase'. Again, I can't speak too much about title though. Maybe call a title company in your neck of the woods and a local lender who knows about delayed purchases.

@Rodney Banks There are some banks that don't require the 6 month seasoning. I've found a couple here in Wisconsin, you'll just have to do your research for where you live. Check with some national banks too.

Hmm, i never heard of such, i'll definitely seek more answers in this direction. The property would be awarded to me in the form a Judgment, foreclosing the rights of redemption, assuming that i pay off arrears.  

Originally posted by @Omar Michel :

I can speak for the lending side, not too much the title side, I'm in California. As a lender, you could do a cash out before the six months if you purchased the property all in cash, provide documentation that you did (bank statements, etc.), bought as a natural person or LLC (in which you own 100%), and get a preliminary title report showing no liens. This process is called a 'delayed purchase'. Again, I can't speak too much about title though. Maybe call a title company in your neck of the woods and a local lender who knows about delayed purchases.